Bankless - $BLUR AIRDROP with Blur's Founder, Pacman

Episode Date: February 16, 2023

In today's episode, David sits down with Pacman, the Founder of the NFT trading marketplace, Blur.  Blur recently launched their $BLUR token and Pacman joins us to share the entire airdrop story, the different phases that went into it, and what's next for the fascinating OpenSea competitor.  ------  MetaMask Learn  https://bankless.cc/metamaskshow  ------  JOIN BANKLESS PREMIUM:  https://newsletter.banklesshq.com/subscribe  ------ BANKLESS SPONSOR TOOLS:  KRAKEN | MOST-TRUSTED CRYPTO EXCHANGE https://bankless.cc/kraken  UNISWAP | ON-CHAIN MARKETPLACE https://bankless.cc/uniswap  ️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum   EARNIFI | CLAIM YOUR UNCLAIMED AIRDROPS https://bankless.cc/earnifi   ------ Timestamps: 0:00 Intro  3:27 Who is Pacman? 5:55 Why Blur? 7:15 Traders vs. Collectors 10:28 What Blur Built  15:00 $BLUR Token Story 26:50 Airdrop Phases  31:50 $BLUR Airdrop Details 35:10 Pacman's Reaction to the Drop 40:47 OpenSea vs. Blur  43:38 $BLUR Utility 45:13 Season Two 49:20 NFT Royalty Wars  55:30 Closing & Disclaimers  ------ Resources:  Blur https://blur.io/  Pacman https://twitter.com/PacmanBlur  ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures 

Bankless Nation, welcome to this very special edition of Bankless. We got to talk about the airdrop that just happened because it has burned an all-time high 24-hour of Eith Burn inside of 24 hours. It always gets me excited. But of course, we're talking about the Blur NFT trading platform, which just released this token into the wild and has gained a ton of excitement. Just some quick stats to throw at you all $1 billion in volumes traded through Blur. over one billion traits, almost 100,000 active users so far. And ever since the late stages of 2022 has been gaining in market share over OpenC, and so we're bringing on the Blur founder, Pac-Man.

I don't know if he calls himself a founder. I'll ask him that when we get on to the show to talk about the ethos of Blur. How does Blur position itself in the world of NFTs? Who is Blur optimizing for? Is it optimizing for traders? Is it optimizing for collectors? How is Blur going to develop and how did this massiveirdrop that just came into the world today? How is it organized? What does the token do?

And all of the other royalty wars that are also part of the conversation going around in the NFT world. So all of these conversations and more. But first, a moment to talk about some of these fantastic sponsors that make the show possible. Cracken has been a leader in the crypto industry for the last 12 years. Dedicated to accelerating the global adoption of crypto, Cracken puts an emphasis on security, transparency, and client support, which is why over nine million clients have come to love Cracken's products. Whether you're a beginner or a pro, the Cracken U.S. is simple, intuitive, and frictionless, making the Cracken app a great place

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How many total airdrops have you gotten? This last bull market had a ton of them. Did you get them all? Maybe you missed one. So here's what you should do. Go to Earnify and plug in your Ethereum wallet, and Earnify will tell you if you have any unclaimed airdrops that you can get. And it also does POAPs and mintable NFTs. Any kind of money that your wallet can claim, Earnify will tell you about it.

And you should probably do it now because some air drops expire. And if you sign up for Earnify, they'll email you anytime one of your wallets has a new air drop for it to make sure that you never lose anirdrop ever again. You can also upgrade to Earnify premium to unlock access to air drops that are beyond the basics and are able to set reminders for more wallets. And for just under $21 a month, it probably pays for itself with just one

air drop. So plug in your wallets at Earnify and see what you get. That's E-A-R-N-I.com. And make sure you never lose another air drop. Bankless Nation, I am here with Pac-Man. And as you can see, if you are watching the YouTube, this is a visual representation of what Pac-Man may or may not look like. Pac-Man, welcome to the show. GM-GM. Thanks so much for having me. So Pac-Man, we're going to talk all, of course, about Blur, the NFT trading marketplace, the Airdrop and also the royalties wars. But as bankless listeners, we'll probably know, I don't pay attention to the NFT world nearly as much as I do, the Defi or the protocol or layer two spaces. So I kind of want to start this conversation at the

very beginnings. Who are you? And how did you come to work and found Blur? And where did that idea come from in the first place? Yeah, totally. Would it be helpful to just get kind of some background on myself. Sure. Just to start off. Yeah. Yeah. So for me, I got my start in engineering around eight years ago in Silicon Valley.

So I started off as an engineer and then quickly moved on to starting my first business back in 2016. I went through Y Combinator, which, you know, for those of you in the Web 2 world, will know, maybe in Web 3 or less familiar, but, you know, YC, they are a big accelerator. They funded Dropbox, Stripe, Airbnb, Reddit. I went through their program. Afterwards, really wanted to go to school, ended up going to MIT, studied math there with computer science,

and I met Gallagher, my co-founder. And we basically just hit it off and started working together ever since. You know, initially started working on side projects. We eventually left MIT to start our first business together back in 2018. We ran that business for three years, and we sold it at the end of 2021. And we started working on Blur immediately afterwards. And the reason why is because in 2021,

I personally gotten really into NFTs. I'm into the BlipMap as my first NFT. I held it to its A, sold it, and then I was just completely hooked. I really fell in love with the trading side of NFTs, but I was just very frustrated with the infrastructure. All the existing marketplaces were very retail oriented and rather slow and quunky. I wanted something that was more of a professional trading platform for NFTs. So that's exactly what we set out to build that blur. And so you identified as an NFT trader very early on.

It's like that's kind of the thing that really gravitated, you gravitated towards. But then out of your frustration of the lack of infrastructure for NFT traders, that was the main inspiration for creating Blur? Yep, exactly. And what would you say? What was deficient in the world of NFT trading that frustrated you before Blur was created? Yeah, you know, David, I think as someone who's maybe more familiar with the token world, I think the right analogy is if you look at the progression of the token trading market,

Right? We started with infrastructure like Mount Cox or Coinbase. These are very primitive, you know, retail-friendly ways to, you know, at least Coinbase, retail-friendly way to buy and sell crypto. And then over time, you saw as the needs of the space developed, the infrastructure became increasingly advanced and financialized. We went from, you know, infrastructure like Coinbase, which is very optimized for retail, to more crypto-native exchanges. You had, you know, finance, OK, X, will be bitmex, stare-a-bit, more.

financialized exchanges, you know, FDX, of course, before they rugged everyone. So that development of infrastructure is the same progression that we're seeing in the NFT space today. When you look at the NFT market, it's really only had its moment in the last two years. So the infrastructure really has not had too much time to develop, but the needs of the space have been growing. And so that need for professionalization and the professionalized infrastructure is exactly the need that we're serving. Yeah, so let's dive into that niche that Blur has really optimized for. So optimized for NFT traders as opposed to collectors. Can you just help help me understand the area of the NFT world that Blur has really carved out? Totally. So, you know, I think when you're like a newcomer

to NFTs, the existing marketplaces that, you know, we're all here prior to Blur, they really served that use case while, you know, they treated NFTs as a more traditional shopping experience, right? Like what you would see on Amazon or eBay or Craigslist. And it worked really well for the dabblers. But if you're a very active collector or if you're a trader, you really want to buy in size, you want to be able to monitor the market in real time. A lot of these collections, they can, you know, the floor can shift very quickly on you,

right? You can go down or up. And especially for the hot collections, there can be oftentimes so many orders happening at once that prior to blur, all these platforms would just crash when the market got really hot and wouldn't even be able to support even basic levels of trading. And that was because these marketplaces really treated NFTs as a shopping experience, which again works for the retail user or the beginner, but for someone who's very active in the space and is trying to take a position and move quickly in the market, they want something that's more akin to, you know, whenever you use

an advanced token trading exchange, you have a real-time order book, you have a live order speed, right? As trades are happening, you're seeing that all update live. The depth charts updating live. You're able to chart things, you know, very quickly see a lot of data all at once, all updating in real time. And really before Blur, that kind of experience in the marketplace just did not exist. So that's really the key focus of Blur from day one. You'll notice even from, you know, our early tweet announcements or blog posts, we've always made it very clear that we're focused on building the best NFT marketplace for pro traders. Okay, so you are optimizing for people who are really leaning into the financial

aspects of these NFTs, where these NFTs are tokens, hence they are, yeah, have some sort of financial aspect to them where other people might just be perusing through open seas, like, oh, I guess I like that one. I guess I'll add it to my cart. This is not what Blur is optimized for. Blur has optimized for the power user of the NFT industry. Is that a fair description? Exactly, yeah.

I would say, you know, in a similar way to when you look at why someone would buy Bitcoin or ETH or any other token, there might be some utility to it. There might be, you know, maybe it's ultrasound money. Maybe it's something else. But ultimately, the exchanges that these tokens trade on, they're really focused on serving the core financial need of trading the token around, you know, the speculation. And that's not in like a negative right, right? In any market, there's hedgers and speculators.

and the exchanges serve matching the needs of the hedgers and the speculators. And ultimately, when we think about what do we bring to the table for Blur as a protocol in marketplace, it's really about making that market more liquid and more efficient, enabling it to grow, just like the advanced exchange infrastructure and tokens really allowed the space to grow as well.

Yeah, so I was looking at some Dune Analytics boards before we hopped into this live stream here and I'll repeat the numbers that I said at the beginning. A billion dollars in total. volume over a billion trades and almost 100,000 active users. What has Blur built that attracted all of that volume, attracted all of that trading activity? So if we're talking about building an NFT marketplace that's really optimized for the power user, let's talk about the details of what that means. What has Blur built that has allowed for all of these power

users to really be power users? Yeah, totally. I know, David, I'm really glad that you did your research. It was it was a billion. It was actually over a billion, 1.2 billion. There's a really great analytics chart from Hill Dobby, who I can share that afterwards. He does some really great analysis. But I think the right way to think about it is just to imagine the token trading market, if any of the more crypto-native exchanges beyond Coinbase didn't exist, right? Like if finance didn't exist, FitMax, Deribit, any of these exchanges, just imagine just buying on, you know, buying and selling Bitcoin on Coinbase consumer. That's basically what the state of the market was about, you know, 394 days ago when we started working on Blur.

And that infrastructure was what was serving the NFT market as it was doing, you know, $4 billion worth of trading volume every month at its peak. So there was just a massive, massive need for even just basic, more professionalized infrastructure. One of the products that we released, this was a combination of UI plus the protocol integration, but one of the products that we released was blur bidding, which allowed traders to actually start bidding with ETH, and we actually visualized the order book of bids directly in the marketplace.

And this is fairly basic in the token trading world, but this was massively meta-changing in the end of the end. because now when traders were going into a collection, they can see, oh, this collection has, you know, 5,000, 8,000, eth of bids on the order book supporting the floor price. You know, this is a collection that I can buy into and I have fairly good confidence that it's just not going to drop on me, whereas a collection without any sort of depth on the buy side, you know, is probably going to have a much harder time maintaining its price stability. So this is something that's, you know, fairly basic.

And from the token trading world, you'd be like, of course, you need an order book like, that's fundamental to how an exchange works, but that's really just not something that existed in the NFT world before Blur released it. Okay. And so, okay, so it's really just perhaps just UI and UI upgrades, which allows for just more visualization of this state of the market, perhaps some on-chain optimizations of how trades get executed, perhaps, but it really kind of just sounds like enabling users to have more data and tools at their disposal to engage in the financial aspect of NFTs? Yeah, I would say, I would say it's a combination of both. When you look at what we did on the protocol level, so prior to blur bids, basically whenever you

want to bid on an NFT, you had to convert your ETH into wheat. And it's a very confusing experience. Even for myself, as someone who's an advanced user, it was just always so confusing and clunky. And of course, especially for a newcomer, it's just really, really confusing and really easy to show yourself in the foot with it. And what we did was we simplified that at the protocol level by enabling users to bid by depositing Ethan to their own pool. And they didn't have to think of it as a separate construct because they could not only bid with that, but they could also buy NFTs with that. is a fairly simple concept, but that simple concepts, really they're just satisfied a massive gaping hole in the market. I would say it's similar to, you know, when you look at what protocols have really enabled growth and the defy world, when you look at something like uniswap, it's like not necessarily the most complicated idea.

And the product itself might be quite simple, but it can serve a need that wasn't really being met before. And similarly, when we think about blur, at its core, it's a very simple product. protocol, but it just really meant a need that wasn't being filled at all before. Certainly. And I did hear you say that you started working on Blur 394 days ago. 94. Was that right? Yeah, 94. Okay. So a little bit over a year and a month. And so a year and a month later since the inception of beginning to work on Blur, you guys released the token, the token air drop. And of course, this is why we're doing the show today of all days is because token, are exciting. People love to talk about tokens. And so can you talk about just the story of the token?

As I understand this was a multi-phase iteration of getting a token out into the wild. Can you walk us through that story of how the token was incepted and born and now released to the public? Yeah, totally. So the token was planned, you know, really everything that we built, Epler was planned from day one. You know, it would really just be like, if you imagined the market as it is today in tokens and then just take out every other exchange besides Coinbase. You'd be like, oh my God, there's a huge opportunity to just build like finance or any other crypto native exchange and you know it's just going to work. You just need to build it. That was basically the position that we found ourselves in 394 days ago when we're looking at

the market, you know, both for ourselves as traders in the market and then as builders, it was very clear that none of the marketplaces were really thinking about the space in this way. And when we think about the power of Web3, something that we really take a lot of inspiration from is really when you look at Defi, you know, it's really just not possible in Web2 to actually give the end users control over the platforms, right? There's always this delineation between the platform and the user, and there's actually usually very combative. Whereas in Web 3, you're actually able to give the end users control over the protocol. and they can actually control the value or cruel and distribution,

and you can align incentives in a way that's just frankly not possible in Web2. So when we thought about what made sense for this space, it was really interesting because NFTs are, you know, a completely new asset class. They enable decentralized ownership of digital collectibles, and they were all being traded on what was effectively a Web2 marketplace. And that just didn't make any sense to us. You know, when we thought about this market,

it was clear, okay, there's a gaping hole in terms of serving the pro users. And then also there's a gaping hole in terms of aligning the business model of the infrastructure with the users of that infrastructure. And it was just very shocking to us because it just felt like at multiple levels, the space wasn't really operating in an efficient way, even though NFTs are so adjacent to defy and tokens. And it's just like so clear, it's just like, you take a step across the line and it's just like, wow, this is just like a very similar to space.

that's just not even paying any attention to what's happening in defy our tokens. And that's really the position that we found ourselves in when we started working on Blur. And so the idea was always, hey, we're going to make an NFT marketplace and it's going to have a token because OpenC is constrained by nation state regulation and the chasm of being Web 2.5. And so the idea was to make an NFT marketplace to be a better trading experience, but then also have a token from day one. So the token was in the plan from day one, right? Yeah, exactly.

And it's very much similar to, you know, ultimately it's, if you look at every protocol today, right, a lot of the difference is whether you set out to build it in a decentralized way or not from day one. Like Uniswap could be a centralized Ksoda product. You know, they could KYC every user. They could have restrictions. And, you know, it was built in such a way that enabled decentralization. But you could imagine it as a Web2 product if you would. wanted to be very easy to. But they built it in a way that actually enabled the decentralization.

Similarly, when we looked at the marketplaces, it was very clear that all the marketplaces were built, you know, at least at the time, there's been some, you know, some more experimentation and innovation since, which has been great to see. But ultimately, the majority of the market share was on marketplaces that were built in a very web two fashion. It was very clear that, you know, decentralization was something that they really, you know, focus on from day one, whereas when we look at the space, it was just like, you know, how it was just kind of so obvious. It was like, how can we not build it in such a way to actually enable the end users? Like when I think about a protocol that is managed by a single entity that's running in a very web two way versus a protocol

that has the end users controlling it and that those end users are the ones that make up the network effect of the protocol and ultimately network effects are everything. When we think about that comparison is very clear to us that a protocol that has, has the end users having control is the one that's going to win. So that's really the impetus for why it made sense for us to build it in such a way that we could do this. Right. And that's, of course, just what the Web 3 philosophy really is.

And it's one thing to be able to create a token and say, hey, we can get this into the hands of the community. But then actually getting the token into the hands of the community is a different story. Can you talk about the strategy for how Blur release the token in ways that found so that the token would find its way into the hands of the aligned community members? Yeah, totally. The number one cardinal rule that we had when thinking through the airdrop was to only ever incentivize liquidity, never volume. The issue with volume, and I think we've seen this play out many times in the defy world, but the issue with volume is that you immediately

just get wash traders or arbitrages and they'll just, it's just a simple mathematical equation, right? They'll do the calculation and they'll figure out, okay, if I, you know, fake trades, this many trades, I'll make this much profit and I can just keep on doing it until, you know, it's no longer EV positive. And that's exactly what has happened with some of the other marketplaces that try to incentivizing volume. If you look at what really works well in DFI, right, like a curve, they don't incentivize volume. They just incentivize liquidity, right, on either side of a peg. And that liquidity actually helps maintain the peg. And when people want to trade, The incentive to trade is because you have good liquidity.

So ultimately, when we thought about how do we construct this air drop to get the token into the right hands, it was very clear to us that incentivizing liquidity and not volume was the right solution, because that actually can bring real users into the space. And those real users, if you take away the incentives, can actually stay around and maintain the network effect. And we actually experimented with this by we sequenced

the air drop rewards. So the first air drop period was for listing on Blur, so providing ask side liquidity. First before we talked about that, air drop periods. Can you define that real quick? Oh, yeah, totally. So this is something somewhat untraditional that I think we did was we basically made the air drop very, very explicit. And instead of just releasing the protocol and then not saying anything and then dropping

a token, you know, months later, we made it very clear in order to get the air drop, you needed to provide liquidity to blur, first on the ask side and then on the bid side. And we did that because when we think about power of tokens as a motivator of behavior, it seems like a somewhat of a waste to do a completely retroactive air drop. Because when it's retroactive, if it's purely retroactive and everyone was already using the protocol, then you're really just burning a lot of dry powder that the protocol could be using to actually grow itself. When you think about, if you were to think about any sort of, you know, CEO operating, if the CEO were to just go and spend, you know, $10 million on an ad campaign that didn't do anything for the business, you'd be like, okay,

you're a terrible capital allocator. And that's just a waste of money. You know, maybe there's some brand building that, you know, you can definitely, you can definitely say that. that it does some brand building, it's not completely zero. But ultimately, you know, if a protocol could utilize $10 million to actually further the growth of the protocol, so that actually grow even bigger and maybe next time around not give out $10 million, but maybe give out $20 million. Or if you do it effectively, maybe instead of $20 million and give out $50 million, you know, I think if a protocol utilizes its funds and treasury effectively, then it can actually be growing in a way that's very conducive to the end goals of the protocol. And so when we thought about the AirDrop,

didn't really make sense for us, you know, when we, when we were thinking about putting blur, it didn't make sense for us to do it retroactively once the network effect was built. We thought, you know, why not reward the users that are actually building up the network effect, you know, from day zero. And that's really why we made thisirdrop, a multi-round air drop heading into the token launch. Right. Multi-round air drop and importantly making the criteria for receiving the airdrop explicit, which is something that other airdrops would not do at all because that they would be worried about airdrop farmers and airdrop gamers just spamming the system. But it sounds like the criteria for actually receiving theirdrop, I'm assuming,

has been determined to be things that are ungameable. Is my intuition correct here? Yeah, exactly. And that's not to say that this is an easy problem at all, even if, you know, especially I think we all to just know whenever you make an incentive system explicit, it's just inviting people to come in

and game it. Many of our early investors actually made their wealth just figuring out these early defy summer incentive systems and utilizing them in ways that maybe the protocol creators didn't even think about. But ultimately it was what was

enabled through the incentive design. So it's something that's very tricky. But ultimately, if you are incentivizing liquidity, and in your incentivizing real liquidity, that's something that's quite difficult to game, because whether I'm farming or a real bidder, for example, you know, liquidity is liquidity. Someone can go and take my bid, and now I have, you know, the other side of that trade. And I just took risk by putting that bid onto the order book. You know, that's real risk. You can't really gamify that. Maybe you can hack it. Maybe there's

way for you to, you know, remove your bid right before it gets, you know, maybe you can like front run the trade or something like that. So like there's, there's things you have to watch out for like that. But outside of just like, especially hacking the system in that way, if you think about what incentivizing liquidity does, it actually brings real value to the network. And so that's what we really focus on was, you know, can we come up with a formula that enables the users to actually provide liquidity in a way that's, you know, difficult to gain, difficult to hack. And if we can do that, and actually making the system explicit works really, really well. It doesn't work for all types of protocols and all types of air drops.

Like, I don't think this is a one-size-fits-all solution, but for Blur, where it was very important to build a network effect to build liquidity onto a marketplace that was, you know, going up against incumbents that were already worth, you know, tens of billions of dollars. It was very clear to us that, you know, we had to really focus the efforts on things that would grow their protocol. Okay, so let's walk through the three phases of the airdrop criteria.

Is that right? And so can you walk us through each phase and the goals of each one? Yeah, totally. So there are three phases. The first was it was a retroactive trading air drop, basically based on your, you know, volume for the last like six months prior to October 19th. The second one was a listing airdrop. So by listing on Blur and providing liquidity onto Blur's order book, you received rewards for that. And then finally, the third AirDrop was the bidding air drop.

So we shifted the rewards entirely from listing over to bidding. And interestingly, once we stopped the listing rewards, we saw the ask volume. So this is volume from people buying listings on Blur. We actually saw it grow after we sought those listing incentives. So that indicated to us that, you know, basically the plan worked. It actually did bring real users into the protocol and they stuck around. And then, you know, we focus on purely incentivizing the bid side liquidity. And then, you know, basically that just fills up the order book, right?

You have the ask side. You have the list. You have the bid side. Now you have both sides. not necessarily the most complicated concept, but that was the strategy that we took to, you know, basically build up a network effect for the marketplace. Did you accidentally move the prices of any NFTs in the process? What was like the collateral effects of this?

You know, it's really interesting because there is this one tweet thread when we shifted the, well, one is when we first did the listing incentive, people were saying, blur was hurting floor prices. And then when we switch over to the bidding incentives, you would think, okay, if you switch over the incentives to the other side, then clearly people will intuit that this is going to support the floor prices. And it did have an effect on the floor prices,

but there is this, there was a thread that went really viral where this person was basically tweeting that blurs, incentives were hurting your floor prices, and there's nothing you could do to stop it. And it was actually a very catchy thread. They wrote it in like a very like just like viral like memetic way. And then everyone was coming out and being like, oh, like is blur bidding like hurting floor prices? And it was just like it was the most shocking thing because if you just study any sort of financial market, it's like a bid wall is only going to support the price of an asset.

It's just it was just such a shocking concept. And to see it actually gain traction in the market was was a very interesting learning experience. And then actually now a month, you know, two months later, as we were heading into the token launch, a lot of people were speculating that the incentives was sup. And then the same person that started the viral thread that Blur was hurting for prices was now tweeting that, you know, Blur's lack of incentives, you know, Blur's incentives ending was going to crash four prices yet again. So it was really such an incredible shocking sequence events where it's like, you know, listing incentives. hurt floors, bidding incentives hurt floors, the lack of bidding incentives hurt floors. It was like,

wow, it's like you incentivize anything. It doesn't matter which way you do it. You're just going to destroy the floors, apparently. Well, this sounds like a very typical crypto Twitter. If it bleeds, it leads in rage marketing tactics, if you ask me. Yeah, yeah, that's a really good way to frame it. I haven't heard of that term before, but I do think it's, it does strike me as rage marketing. But with that said, I do think that, you know, ultimately liquidity doesn't really change the price of an asset so much as it really enables the asset to find its true market price. And if the liquidity changes the price, then I think that what that really means is that the price that people perceived before was not really an accurate price. right, because the floor price or, you know, the bid ask middle point, right, the spread there and whatever, whatever the mark price is, like, that's not really the true price.

Like when we think about the price of an asset, a static number doesn't really accurately capture what's going on. And people just anchor around specific numbers. And so I think that when you have these liquidity incentives, it just, it gives you a different picture of the true price of the asset. But ultimately, it's still just, you know, you're kind of just like looking at like the leg of the elephant versus like the trunk of the elephant. Right. And that's, I think, what really all that it did.

Sure. Yeah. The momentary price of something is just a snapshot of the overall picture. And I would like to also get the snapshot of the current state of the token. So how many people got theirdrop? What is the supply of the token out of, what's the outstanding supply of the token versus the total, the rest of the supply? Can you just walk me through some of the metrics around the token? Yeah, totally.

So the total supply of the token is $3 billion, $3 billion blur. The airdrop was 12% of the supply, so $360 million blur. I need to check the metrics, but I believe like a very large portion of the air drop has already been claimed. Like I think it's like $200 million of the $360 million or maybe like $240 million at this point. I honestly don't know. But a large portion of the AirDrop has already been claimed and can be claimed over the next 60 days. Ultimately, the Blur token, the tokenomics follow a very similar structure to Uniswap, actually. When we thought about what made sense here, you know, if you think about Blur as a protocol,

uniswap is an exchange for tokens and Blur as a protocol as an exchange for NFTs. And so if you zoom out and squint, those are basically the same thing. And when we thought about what made sense here, I think especially in a bear market where there's more, what we've seen is that there's more of a return to fundamentals and a return to value. And we wanted a simple tokenomic design that had a very clear story for value. So having a tokenomic design, someone's unique, made a lot of sense to us because it's just so simple and easy to understand. You know, Curve is really a phenomenal protocol. We really like GMX as well. Like, these are really interesting protocols that have really, you know, complicated

tokenomic designs that very few people understand. And I think that those sorts of protocols are incredibly powerful in a bull market when the market is more willing to experiment with creative schemes. But in a bare market, we think that there is a more basically a return to value. And what we wanted to do was basically maintain. flexibility at the protocol level so that the community wanted to, they could vote and utilize treasury tokens for future tokenomics, you know, come bold market, but in a bear market, still have a very clear picture for why this protocol makes sense, you know, why holding the token

gives you as a holder, you know, power over the protocol. That was really how we thought about modeling it. So I definitely want to ask you a little bit more about that, but just some numbers about the price of this thing since we are now in a post-drop world at 70 cents, which is what is currently trading on Coin Gecko, and 3 billion tokens apply. That is a market cap of $2.1 billion. And when you said 12% air drop to the community, that is, if I'm doing my math right, I don't think I am, it's a $2.1 billion times 0.12, is that right? Yeah, I think it's like $240 million around.

Oh, no, that was right. Yeah, so $250 million of value airdropped to some number, some thousands of people. And that's just season one. Season two just started. Well, I have to ask about that. First, how does, just like reactions to the $2 billion market cap and also reactions to giving $250 million towards how many ever,

thousands of people, there's reactions to that. Yeah, I think, you know, first reaction is, you know, definitely like I shared at the beginning of this call, please. When we think about the protocol and the token and giving value to the community, you know, I didn't mention this at the beginning, but one of the other reasons that we thought a token made sense here was when we looked at the market, it was clear there was all of this commercial. commercial activity happening on this Web 2 sell marketplace. And, you know, if you looked at the value of that marketplace, right, so like OpenC in the bull market was, you know, raising at 13 billion. I think I remember hearing that there were secondary that like 18 billion. But that value is, you know, just by no fault of OpenC is just kind of due to how, you know, web two companies are structured. It's very concentrated, right? It's concentrated in the founders. It's concentrated in like A16 and Z, you know, a few other funds. And, you know, that value does not go to the community. The power of a protocol is that when you can protocolize something, you can actually give away the tokens to the community. And then you have, when we thought about, you know, what was possible here, it's, oh, if we can actually execute in the way that we think it's possible to execute in terms of pursuing this market

opportunity, we have the value to give away, you know, billions of dollars of value to the community. And when I think about as an end user, if I'm going to choose, you know, a Web 2 style thing where it's like, okay, I can, you know, I can use it and it works, right? It's like Facebook Marketplace or eBay, like that all works. Or I can use something that is actually going to effectively pay me to become a controller of that protocol for doing the same thing. I definitely want to go and use the thing that actually gives me more control. Like it just, it just seems like a completely plus EV move. So, you know, being able to distribute in. season one, $240 million worth of value, $250, that's really incredible.

But when we think about the reason for Blur having a token in the first place, you know, really working with the community from here to be able to distribute even more values to the community, that's something that's really incredibly exciting to us. And that's something that is ultimately, I believe, in the best interest of the protocol. Like I mentioned before, I think that when we think about protocol governance and, you know, the allocation of tokens via protocol governance, I think it's really important to think of it as capital allocation. And you want efficient capital allocation. You want to be allocating capital. In this case, you know, the protocol is token treasury. You want to be allocating it into

productive use cases that further the growth of the protocol. So we're definitely going to continue trying to contribute in that direction and making sure that it's valuable. But if the community does it right, we should be able to do it in a way that is incredibly rewarding to all the community members. And I think that, you know, what was done today is kind of just a taste of that, basically. Well, I definitely have more questions because apparently we're about to go for round two with season two. So I'm going to, I want to ask about that. But I also want to just talk about the royalties wars because there's a topic of, to that I want to address with that and others as well. But first, we're going to have to pause for a break because I know yet this has been a very long

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Where you can join the community, dive into the developer docs, bridge your assets, and start building your first app. With Arbitrum, experience Web3 development the way it was meant to be. Secure, fast, cheap, and friction-free. And we are back, Bankless Nation. I got one last question that I should have asked earlier. before we cut to commercials, but I want to ask you now. OpenC has equity, as we've discussed, and as you said, all of the value of that equity stays away from the world of Web3,

this fantastic world that we're all operating in. And so I'm looking at doing analytics and just some of the volume numbers, Blur's starting to approach OpenC volumes. And so question to you, Pac-Man, is now that Blur has this secret weapon, which is the token that's in the Web 3 world. It's got a tool that OpenC doesn't have. Do you think that this is the tool

that's going to allow Blur Marketplace, the Blur Marketplace, to dethrone OpenC as the number one NFT marketplace? Yeah, that's a great question. And, you know, actually, I am such a sickler on the metrics. I do believe that in the past week, Blur has done around 30% more volume than OpenC. But you're right.

That's something that has to be persisted for a long period of time. before claiming that throne. And I think that there is multiple dimensions to this. One is Blur is fundamentally serving a segment of the market that no one was really serving well at all, which was the pro traders. But when we think about the value of the token,

ultimately it is an incredible tool that enables huge unlocks that just weren't possible before. Even stepping back a bit, when you think about the NFD market and who wants exposure to that in the space, not just the NFT traders, it's not just the users of the space, but there's so many participants on the sidelines who are very aware of the growth of the space, right? All of the growth that Blur has achieved has been in the wake of FTX collapsing, the institutions that we all rely on for liquidity collapsing in the wake of that, Luna collapsing, you know, all of the activity has

maintained through one of the worst spare markets that we've ever seen. So the NFT space has really shown its longevity and sickiness. effectively. It's something that once people get in, they really get hooked. Like that was the same thing that happened to me. And when you think about the participants that might want exposure to that, you know, before it was very difficult to get that exposure. If you're a fund and you want $100 million of exposure to the NFT market, you can't just go and spend $100 million on NFTs. The space is just too illiquid for that. And it was just completely distort the prices. But now that Blur actually has leading market share in the space, it has enough market share that it

effectively becomes an index on NFTs and not just on NFTs but actually on the fastest growing segment of NFTs, which is a pro trading segment. And that index is actually a huge unlock that can allow so many more players to get exposure to NFTs in a way that just wasn't really possible before. Yeah. So when you look at the blur token, how does it express itself? And I guess only the market can really determine this. But like in terms of like what it gives over like governance over the Blur platform, how do you think it's going to be received by like the financial world around it? Like what are people going to get to when they see the Blur token? Do you think it's just going to give them access to just exposure to NFTs broadly without

actually picking winners of NFTs specifically? Yeah, I think it really depends on the participant, right? If you're someone that is an active NFT trader and you're, you know, in there grinding every day and just really, you know, in the space, then it's going to be more. more of a reward and exposure to the growth of a protocol that you use, you know, every day effectively. But if you think about, you know, if you're a fund manager or if you're someone on the side, that, you know, it's a very, it can be a very exhausting space. It's not necessarily for everyone, right? But I think almost, I mean, it doesn't take a genius to look at the charts

and see, wow, this space is really growing. It's really sicky and it's getting so much adoption. When we think about the potential, you know, if you just think about the next generation of consumers, they grew up with digital objects, right, like buying Fortnite skins and Roblox items in a way that Millennials just never really did. So when I think about the potential of NFTs, it's just really massive. And for those players, Blur now effectively becomes a way to get exposure in a very passive vehicle effectively. So I think it is different for everyone involved. So let's talk about season two. What is involved with season two? You said season two's already started. So can you just tell us that story?

Yeah, totally. So season two, you know, like we mentioned earlier, the initial 12% air drop is all for season one. There's still a fairly large treasury that the community can vote on to utilize, right, for future incentives or for other programs, right? It doesn't have to just be for incentive programs. It can be for, you know, translation services, building new sub-downs. I really like MakerDAO in terms of their efforts of starting sub-dive. you know, all around the world, working on different initiatives. I think that that's a really beautiful unlock up of three. But one of the core things that we can do is actually continue the progression of the

incentives because if you look at the NFT market today, the reason why we would do this, you know, like I mentioned before, we stopped the listing incentives for season one, and we sell the listing volume grow. So when we speak about efficient capital allocation, it doesn't necessarily make sense to keep on allocating heavily into that. But when we think about, you know, where do we go from here? If you look at the NFT infrastructure today, it's still very primitive, right? Like NFT, if you zoom out and think of it as an exchange, it's basically like a spot exchange, right?

It's very simple. It doesn't really have any of these more interesting, advanced financial primitives. And of course, you can't just treat it as an exchange. It is fundamentally a marketplace because NFTs are a different asset class and they're not, it's not an exchange. It is very much something that is a combination of shopping and trading, which is very interesting. But if you look at just how it developed token infrastructure is, it gives you a sense that there's a lot more to come in the NFT space as it develops and professionalizes. And ultimately, given that there is still so much to develop, to us, it doesn't make sense for those incentives to just completely stop because there's new behaviors, there's new products that can be introduced. You're not just from us as core contributors, but from the community, the community has shared some incredible ideas that I think are very exciting.

And those are all things that can be pursued, you know, in season two effectively. Yeah, so it's just the general vibe. Season one is ceding the community with the token that they will then need in season two to govern. And so like season one is distribution and season two is giving the community a voice and starting to incentivize governance, not just usage of the protocol. Is that a fair description? Yeah, definitely, definitely. And there is a specific allocation.

So there's a incentive committee that can utilize up to 10% for season two or beyond rewards. Ultimately, though, anything beyond that is something that can be utilized via governance. And whether they're, you know, like if you look at the recent optimism air drop, they actually just air drop to people who participate in governance. That was very interesting. And I think that that's going to teach a lot of people, hey, actually there's value in participating in governance. Because for a protocol, that does provide value if you decentralize the holder base and decentralize the decision making even more so than it naturally occurs. So when we think about what happens from here on, the creative space is really massive.

And of course, you know, thankfully, the Blur Protocol has a very large treasury in which you can utilize these incentives to, again, allocate the capital in ways that are predictatively growing the protocol. Yeah. And, of course, governance is very, very hard to game. So there is no such thing as, like, governance farming. So I would imagine that asking about season three is just too far in the future because season three will probably only be determined by the governors that come about in season two. Is that right?

I would think so, yes. Yeah. Well, congratulations, Packer. I know this is a very long day for you. So thank you for taking time out of your very busy, probably sleep-deprived day to come and tell us a story of blur. David, thank you so much for having me. Wouldn't want to be anywhere else right now.

Cheers. I did want to ask one last thing about the NFT royalty wars. That is the whole entire episode in of itself. But I just want to ask you to pick your brain really quickly about that. It kind of just sounds like from my defy side of my perspective here is that there's been this tug-of-war between open-see and blur about how to enforce royalties. and Blur is fighting for the most optimized trading experience, and OpenC is trying to optimize for artists and royalties, and there's been this tug of war here.

Do you have any of just thoughts or anything, any ideas you want to share about that? Yeah, it's a great question. I think that we definitely have different ideas on what will actually work in the space. So just for a bit of context, when about two weeks, I think, after launch or maybe three, OpenC kind of came out with a new policy where they said, if you're a collection creator, you need a filter blur, otherwise you won't be able to earn royalties on OpenC. And when we saw that policy, you know, we were basically like,

oh, we can actually adopt this and start enforcing royalties on collections that utilize this ourselves because ultimately, if they have a way to temporarily block trades, that don't honor royalties, and that's something that we can get behind and adopt. The issue is that when a collection doesn't have the ability to do that, then there are other protocols, there are like AMMs for NFTs, there are zero royalty Web2 sell marketplaces

that effectively take a royalty evasion approach for growth. And there's nothing that can really stop trading from going to those platforms. And if you observe the market, you can clearly see that this, this market and markets in general, they do operate in an efficient way. They do trend towards lower fees over time. And if you create an incentive for them to trend to no fee venues, right? So if all the existing marketplaces enforce royalties across the board and they never change

their position, all that does is it's going to create an incentive for a new player to come in and say, we're actually going to not do this. We're going to be the bad guy and we're going to get all the growth because the market ultimately doesn't really care. It's a moloch trap. Yeah. So when we thought about what made sense here, it was really just about, okay, can we can we design a system that is actually going to reach a sety state? The thing that we didn't want to do is we didn't want to take a policy that sounded really good, but wouldn't work for more than, you know, a month, maybe two months. And so we've tried to take a more, you know, thread the needle approach. For example, we, we adopted full royalties on all collections I had a filter in them, not because the filters

aren't circumventable. Ultimately, I think in the defyre world, you know, people have explored this problem extensively, and there isn't really a way to actually protect royalties in a fully on-chain way. It just doesn't work. You can always create a wrapper, you can do something to get around it, and it's not sustainable from a coding standpoint. So we know that in on-chain, filter won't work in the long run. But if it works in the short run, just because people haven't really updated their systems or, you know, players haven't come around, you know, circumventing them, then that's something that we can adopt at least in the short term. And that made sense to us, which is why we actually adopted it within a week of the release of the policy. But then for the

existing collections, it's really been about how can we thread the needle so that we can actually increase the royalty enforcement without also increasing the incentive to depart from blur and go to protocol that maybe is taking a more aggressive approach. And so what we did was starting on January 1st, we started enforcing a minimum.5% royalties. We kind of evaluated the market and we felt like 0.5% was a reasonable minimum. And we felt like the traders wouldn't really leave Blur, you know, with that fee. And it actually worked really well. And if you look at the fees chart, token terminal has a really great fees chart for Blur. You can see it just shot up immediately afterwards. And that was after evaluating, okay, we can actually do this without impacting market.

and effectively reducing the net royalties paid by, you know, because if we set, you can imagine if we set the minimum to 10%, what that would do is basically everyone would stop using blur and everyone would just start using, you know, zero royalty solutions immediately. So it just doesn't accomplish anything. So we're basically trying to thread the needle. I think that's really the main difference in approaches that we see. I think philosophically we're probably aligned, although we're definitely more on the pro decentralization.

bent, I think that introducing any form of centralization in the native asset of the space just creates supreme dangers. You know, it's imagine if like Satoshi Nakamoto just had like the ability to take away people's, you know, bitcoins. It would just be, it would just kill the entire space automatically. So we think it's very, very dangerous and we really try to stray away from that. But we are effectively trying to take a more game, game theoretic approach. I think it's a difficult problem. But ultimately, when we project out five, 10 years from now, I don't think that we kind of are in these like constant battles and, you know, these like skirmishes that just like never end. I think that there is a steady

state and ultimately we're trying to push ourselves and push the NFT space towards that steady state. We don't quite know what it is, but I feel fairly confident in knowing what it isn't. And, you know, what the space was doing before really isn't a steady state because it was just clear it was. It was just unstable. Yeah. It was just unstable. Yeah, it was just unstable. So we're trying to figure out, you know, what is, what is stable? And, you know, like I shared, like when when we launched bidding and the incentives, people were saying that Blur was like hurting floors, like no matter which way we did the incentives, it's been an interesting experience because the market doesn't necessarily always come to the same conclusions that that we do, even though sometimes we think that they're fairly straightforward conclusions. But, you know, that's just that's just a part of being an operator in the space. And that's another aspect of, you know, of playing this game. that we just have to navigate. Sure, of course. And I do appreciate the thoughts

and that you've thought so much about this. It sounds like it's a very coherent strategy that you guys are running with. So thank you for everything you're doing for moving the space forward and exciting to see the future of Blur. Pac-Man, if people want to learn more and they don't know where to go, where should they go?

Yeah, the Twitter is definitely the best starting point. It's Blurr underscore I.O. There have been an incredible number of scams and officiant. though, especially around our token launch. So just make sure to type in BLUR underscore I.O. Or if you want to be safe, go to BLUR.io. Go to the website directly.

But we link to everything from the official website. And before clicking any links, please, please, double check the URL, maybe type it out yourself. L and I on most platforms look exactly the same. It's a terrible thing. They should use a different font. But L and I look exactly the same. So it's super easy to get fish.

You know, type in B-L-U-R and check for it out, please. Awesome. Thank you so much, Pac-Man. And I will finally give you some rest for what has been, I'm sure, one of the longest days in your life. But thank you for coming on Bankless and telling us a story. Thank you for having me. Cheers.

Bankless Station, you guys know the deal. Risks and disclaimers. Crypto is risky. Defi is risky. NF-R-R-T are risky. So is getting fish. So be careful when you type in that URL. But nonetheless, we are headed west.

This is the frontier, but we are glad you are with us on The Bankless Journey. Thanks a lot.